Nestle India - So What’s New (Or Can Be New)?: Nirmal Bang

Nirmal Bang Report

The long-term narrative for revenue and earnings growth for Nestle India Ltd. is highly appealing. Companies such as Nestle India -

1. with a strong pedigree and distribution strength - are expected to benefit significantly from the immense growth prospects of the packaged foods market in India,

2. Further, the successful implementation of the company’s volume-led growth strategy during a large part of Mr. Suresh Narayanan’s tenure provides confidence in execution as well,

3. Significant distribution expansion along with an unprecedented level of capex (~Rs 75 billion during 2020-2025) also indicates the management’s confidence about future growth prospects,

4. However, valuation at ~60 times FY26E earnings per share is expensive and does not offer any significant upside from a one-year perspective.

We value Nestle at 60 times FY26E EPS, translating into a target price of Rs 2,550. We maintain our “Accumulate” stance on Nestle.

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